CAC 40

Price analysis of the CAC 40 index

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76.4% of retail investor accounts lose money when trading CFDs with this provider.
Chart provided by Tradingview

The French CAC 40 Index is one of the most traded assets with European investors and one of the principal indices of the Euronext market. When you start trading on the stock markets it is important to know some basic information about this stock market index so you can rapidly make profitable transactions over the short, medium and long term.  

Latest news

The CAC 40 goes beyond the 5600 points after the PMI and US employment

08/01/2021 - 08h33

The Paris CAC 40 index has performed well, exceeding the threshold of 5 600 points. This is in line with the interesting results obtained on the Paris Stock Exchange recently.

Elements that can influence the price of this asset:

Analysis N°1

Data relating to the French economy such as the GDP, the purchasing power and the unemployment rate.

Analysis N°2

All the policy decisions aimed at assisting French companies to become more profitable (changes in the tax rates, premiums etc...).

Analysis N°3

Major news relating to companies that have more weight in the calculation of this stock market index.

Analysis N°4

The correlation with other worldwide stock market indices, notably those of countries with greater economic strength such as the United States and Japan which are often correlated to the CAC 40.

Analysis N°5

Foreign exchange rates between the Euro and other currencies that will impact the French economy.

Analysis N°6

Major changes in economic policy at the heart of the European Union.

To obtain this information you simply need to subscribe to an online targeted news and events feed but you should know that if you speculate on the CAC 40 index using CFDs you will be able to access targeted information and events through your online broker relating to this market and therefore do not need to concern yourself with extra specific research. 

Let us also take a few minutes to remember the importance of a comprehensive technical analysis of this asset. In fact, the CAC 40 is also a highly speculative asset and the investors that trade on its rate heavily base their forecasts on the charts before taking position. We therefore recommend that you use various technical indicators available to identify the beginning or end of a trend or the attainment of a strategic threshold.

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Trade now on the CAC 40!
76.4% of retail investor accounts lose money when trading CFDs with this provider.

What is the CAC 40?

The name ‘CAC 40’ is in fact an abbreviation of its full name ‘Cotation Assistée en Continue’ and the number 40 represents the forty companies that are quoted. It is the major economical indicator of the French market and is quoted on the Euronext Paris stock exchange. This index therefore takes into account the share quotations for 40 of the largest French companies.

More precisely, the CAC 40 Index is calculated from the share price results of the 40 largest and best performing French companies, extracted from the 100 largest companies quoted on the Paris Euronext stock market. A committee of experts is responsible for the selection of these businesses according to various criteria including company size, stock market capitalisation, and their representation of their activity sector as compared to national data.

We can therefore fairly easily understand that when the shares of companies quoted on the CAC 40 move in a certain direction, the quote for the index itself tends also to follow this trend, whether it is rising or falling. But the ratio afforded to each business and therefore its importance in the calculation of the Paris index rate varies according to the influence of each business in the country’s economy.

The quotation of the CAC 40 index is revised every 15 seconds as it is what is called a ‘continuous quote’. It is possible to follow the movements of this index price from Monday to Friday, from 9 a.m. to 5.30 p.m., which are the opening hours of the Euronext market.

It should be noted here that the Paris Euronext stock exchange is the official market for the French business assets, but it is also part of the NYSE Euronext market which is the major stock market group worldwide.


Composition and calculation of the CAC 40

As we saw above, the CAC 40 is composed of the assets of 40 French companies. Its calculation therefore relies on a weighting of these titles. Of course, all the companies priced do not have the same weight in the calculation of the final index and each one of them is associated to a specific coefficient according to its exchanged volume and thereby its importance compared to the others.   

The CAC 40 index calculation is revised every 15 seconds according to the movements of all the titles represented in real time. The market that reports this quotation is open from Monday to Friday, from 9am to 5.30pm. It is therefore only from 9am that the index takes into account all the orders passed before this time. The market opening therefore generally presents more marked movements than during the remainder of the day.


Where to find the quote for the Paris Stock Market?

It is nowadays fairly easy to consult the quote for the Paris Stock Market. There are several ways to do this. In particular, you can subscribe to a financial review that will give you the new quotes every day, and note events observed over the last 24 hours, or you can consult certain specialised websites that offer the same information.   

Unfortunately, in these two cases, it is not always possible to follow the quote of this stock exchange in real time and therefore seize the best opportunities.


What are the external elements and factors which influence the CAC 40 prices?

To understand how the price of the CAC 40 index is fixed, it is logically necessary to be interested in the French economic activity as a whole. So, all political, financial and economic important information about France is to be taken into account.    

The principal influential elements relate in a direct way to the economy such as the GDP calculation, the ratings agencies evaluations, the employment and unemployment figures and the general results of the various industrial branches. 

The more experienced traders will be able to venture into cross-examining information emanating from the various companies priced in this index but the calculation of these trends remains extremely long and complicated and is therefore not appropriate for beginner investors.   

However, the majority of the Forex trading platforms place at the disposal of their users some charts reporting the more or less recent price movements which make it possible to easily complete a technical analysis and thereby to predict certain trends or movements. It is however recommended to take into account at the same time this data and that of more psychological orders and that related to current events, to detect the “announcement effects” in advance.

As you have undoubtedly understood, the CAC 40 is particularly representative of the French economy. Therefore the indicators to follow, apart from the technical analysis, are as follows:

To summarise, when you establish your trading strategy you should take into account all the environmental indicators together with the market trends.


The function of CFDs for trading in the CAC 40 stock market index:

Now that you have learned about all the data that may assist you when trading on the CAC 40 index rate or completing an analysis of its movements we now offer you the opportunity to learn how CFDs really work with this type of investment.

As you probably already know the term CFD means Contracts for the Difference. These are basically financial derivative products where the rate reflects that of the associated asset. These CFDs actually function not only with trading on stock market indices such as the CAC 40 but also with other types of assets such as stock market shares or even commodities.

Therefore when you take position on the CAC 40 using CFDs this is like signing a contract with your broker and not purchasing shares in this index. It is extremely important that you understand this particularity in order to better comprehend the fundamental characteristics of these unique contracts. We could say that a CFD simply reflects the price or rate of an asset.

It is therefore possible to take position on the rise, this means on the purchase of an asset using CFDs as well as the fall in the rate as is offered by a short sell. The profit or the loss recorded by the trader corresponds in this case to the difference between the rate of the asset at the opening of a position and that of its closure. Of course, as the trader is not the outright owner of the asset on which they are speculating, they cannot receive any other form of benefits such as dividends for example.

But that is not the only particularity of trading using CFDs. In fact, these Contracts for the Difference function in a very different way to those of other placement products. Such as with the broker fees for example. Here of course the brokers receive payment in a different way, through the use of spreads. These spreads are slight differences between the real price of an asset and the rate at which the trader opens or closes a position. It is therefore important to take this slight difference into account before taking your profits. And another point, trading using CFDs enables the use of what is called the leverage effect. This is the possibility of multiplying the amount of your investment by a prior fixed rate. Therefore, with a leverage effect of 1:100, a profit of €1 in fact corresponds to an actual profit of €100 without actually investing a significant amount. However the possible losses engendered by this leverage effect in the case of an erroneous speculation are also multiplied by this same rate so a leverage effect is therefore to be used with prudence.

Nowadays CFDs are proving to be extremely popular with individual investors worldwide as they offer direct access to the markets and enable the traders to develop their own trading strategies.  Also, to be able to use them you only have to take a few minutes to register on an online trading platform and open an account. Of course the possible profits with these contracts are generally highly superior to those using classic placement products but the risks are also greater. Luckily the CFD trading platforms offer numerous analytical tools and assistance that help greatly with your decision making. You can notably find charts that can be entirely customised with numerous indicators and signals as well as financial and stock market news and events and other useful elements such as training modules, risk free demonstration accounts and even automatic orders that enable you to programme the opening and closure of your positions in advance.

Another undeniable advantage of CFDs is that they do not necessarily require a substantial investment, partly due to the leverage effect we mentioned earlier but also because the online trading accounts are accessible through relatively low initial deposits. Of course you do have the possibility of withdrawing your profits when you wish to do so and no long term contract is required with your broker.

Frequently Asked Questions

Where can I follow the CAC 40 course live?

The price of the CAC 40 stock market index can be viewed live from many websites specializing in the stock market and you can also find real-time graphs of this value on your broker's trading platform with valuable and customizable technical indicators . Note that the CAC 40 shares are listed on the Euronext Paris market.

Can we speculate directly on the price of the CAC 40?

While it is of course possible to trade and even buy stocks that are listed on the CAC 40 stock index, know that it is also possible to speculate on this index directly. The price of the CAC 40 is a value on which you can speculate upwards or downwards through CFDs or contracts on the difference, accessible from online trading platforms.

What influences the price of the CAC 40?

As we have seen, the price of the CAC 40 is influenced above all by the evolution of the price of the shares that make it up and more specifically still by the price of the shares of listed companies with the largest capitalization. We can also anticipate its variations by studying the economic health of France in general with the indicators published each month or even by following the decisions of the ECB which influence the euro.

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Trade now on the CAC 40!
76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.